Tuesday, 14 August 2018
That the Senate:
(a) notes that:
(i) Coles is still advertising $1 per litre milk, and Woolworths $1 per litre milk is shown as temporarily unavailable,
(ii) both Coles and Woolworths have exerted downward prices on dairy farmers for many years which has damaged the financial resilience of Australian dairy farmers,
(iii) many dairy farms are family operations which involve long work hours,
(iv) as dairy farmers are obligated to lock in forward milk sale prices, these forward prices are effectively capped by the pressure exerted by Coles and Woolworths,
(v) these forward prices could not contemplate the drastic increase in the cost of hay, wheat and other feed products for the dairy cattle, and
(vi) what Australia grows, grows Australia; and
(b) calls on Coles and Woolworths to:
(i) increase the price of milk to their customers by 20 cents per litre for the full period of the impacts of drought on feed prices, and
(ii) pass the full price increase onto dairy farmers.
The government understands that dairy farmers are understandably frustrated that the retail price of milk has declined in real terms since retailers adopted their milk-pricing policies. The government notes, however, that the Australian Competition and Consumer Commission's recent dairy inquiry report found the price set by retailers has no direct relationship with farmgate prices received by farmers. The ACCC noted that if supermarkets were to increase the price of milk, processors would still not pay farmers any more than they have to in securing milk and that the farmgate prices received by farmers would be unlikely to increase. The government is currently considering the report's recommendations.
Labor acknowledges that many farmers experience severe drought conditions, which in some areas have been ongoing for more than seven years. Coles and Woolworths have donated money to assist farmers, as have many other generous Australians. Labor will not support Senator Burston's motion because it fails to acknowledge the current government's failure to implement the recommendations of the ACCC report into the dairy industry. The ACCC noted that neither the existing provisions of the Competition and Consumer Act 2010 nor a voluntary code of conduct sufficiently addressed these market failures. Therefore, the ACCC makes eight recommendations for improved transparency and allocation of risk in the commercial relationship between the Australian dairy processors and farmers. Most significantly, the ACCC recommends that a mandatory code of conduct be introduced to address the market failures we have identified.
While the Greens appreciate the intent behind this motion, we cannot support it in its current form. Dairy farmers are being hit hard by this awful drought, but it's hard to see how a temporary levy would help. Immediate drought relief through government is critical, and it's clear that the government needs a comprehensive plan for how to support our farmers in the short term and help them to adapt to what will only become a more severe and drought-stricken Australia. Both the ACCC and the Senate economics committee inquiry found that only a mandatory code of conduct would resolve the rolling crisis for our dairy farmers, ending the power of the big processors and the predatory pricing regime that they operate under. I note the Greens' support for bringing in an effects test, as this mechanism would enable a decrease of the power that these big processors have over dairy farmers.